Veidekke ASA: Q4 2019 results

Veidekke generated revenues of NOK 10.8 billion in the fourth quarter. The pre-tax profit of NOK 16 million includes NOK 330 million in allocations linked to future losses and restructuring of the construction operation. The construction operation order book stood at NOK 34.3 billion at quarter-end. In 2019 as a whole, the group achieved revenues of NOK 38.8 billion and a pre-tax profit of NOK 941 million. The group’s profit per share was NOK 4.6 (IFRS), and the board has proposed a dividend of NOK 5.0 per share for the financial year 2019.

“We have implemented significant improvement measures, and restructurings have been executed in the Norwegian and Swedish construction and civil engineering operations. Project portfolio risk has been reduced, and future projects will be approached with even higher risk awareness. At the same time, I am pleased to see that the improvement initiatives taken by the industrial operation are bearing fruit. These efforts are ongoing and will, in combination with the implemented measures, provide a robust foundation for good profitability going forward ,” says Jimmy Bengtsson, Group CEO of Veidekke. 

“Veidekke continues to target a pre-tax profit margin of 3.0%–3.5% for the construction and industrial operations as a whole in 2020, as communicated at the capital markets day in May last year,” says Bengtsson. 

“Work on establishing a revised ownership structure for the property development operation is proceeding on schedule. A decision regarding stock-exchange listing or sale of the operation – and on the transaction model – will be made in the first half of 2020. The activity level of the Scandinavian property development operation increased throughout 2019, and we have a positive outlook on 2020,” says Bengtsson. 

“For the second year in a row, Veidekke’s climate report was given the top ‘A ‘rating in CDP Climate Change’s investor survey. Our response to climate risk and the green shift is becoming increasingly important for achieving long-term profitability. Our inclusion in CDP’s list of A-ranked companies confirms that we are on the right track,” says Jimmy Bengtsson. 

Veidekke generated revenues of NOK 10.8 billion in the fourth quarter, on a par with Q4 2018. While revenues increased in the construction operation, the industrial operation recorded a decline in turnover compared to the corresponding quarter of last year.  

Annual revenues grew to NOK 39 billion in 2019, with all business areas contributing to the 9% increase on last year. The construction operation boosted revenues in all three countries, and accounted for the majority of the increase.  

The group’s Q4 pre-tax profit amounted to NOK 16 million. The construction operations made a loss of NOK 78 million in the quarter following allocations in respect of future losses on the Swedish project portfolio (NOK 200 million) and restructuring costs in Norway and Sweden (NOK 130 million). The Danish operation delivered another strong quarter, and a robust profit margin. The property development operation achieved a quarterly profit of NOK 96 million, compared to NOK 162 million in Q4 2018. Reduced development gains on sales of projects contributed to lower profits than last year. The industrial operation achieved an increased fourth-quarter profit of NOK 30 million, compared to a loss of NOK 4 million in Q4 2018. 

The group’s annual pre-tax profit for 2019 amounted to NOK 941 million, up from NOK 591 million in 2018. In the past two years, the profits of the construction operations have been weakened by allocations in respect of loss-making projects and restructuring of the Norwegian and Swedish operations. The Norwegian property development operation delivered a good performance, although a low number of building starts and reduced residential production in Sweden somewhat reduced profits compared to 2018. The industrial operation achieved a considerable profit improvement in 2019 after implementing improvement measures in all its business areas. 

In Q4, the construction order intake totalled NOK 9.8 billion. As at year-end, the construction order book amounted to NOK 34.3 billion, slightly higher than at the end of 2018. Approximately two-thirds of the order book will be converted into revenue over the next 12 months. 

Net interest-bearing debt totalled NOK 2.7 billion at quarter-end. Net cash flow in the fourth quarter amounted to NOK 2.2 billion. The positive liquidity trend towards the end of the year is linked to the strong seasonal cash flow of the industrial operation, the resolution of legal disputes and good liquidity in construction projects.  

The group LTI (lost time injury) rate, which measures the number of injuries per million hours worked, was 4.1 in the fourth quarter, on a par with the preceding quarter and down from 4.5 in Q4 2018. Veidekke’s sick leave rate was 4.1%, compared to 3.4% in the third quarter and 4.1% in Q4 2018. 

For more information, please contact:

•    Jimmy Bengtsson, Group CEO, tel. +47 984 70 000, jimmy.bengtsson@veidekke.no

•     Jørgen G. Michelet, Finance Director tel. +47 917 43 856, jorgen.michelet@veidekke.no

•     Lars Erik Lund, EVP Communications and Public Affairs, tel. +47 413 31 369, lars.lund@veidekke.no  

For press images, see https://veidekke.fotoware.cloud/fotoweb/archives/5028-Pressebilder-Veidekke/

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This information is subject to a disclosure duty pursuant to section 5-12 of the Securities Trading Act. 

Veidekke is one of Scandinavia's largest construction and property development companies. The company undertakes all types of building construction and civil engineering contracts, develops residential projects, maintains roads, and produces asphalt and aggregates. The company is known for its involvement and local knowledge. Its annual turnover is approximately NOK 39 billion, and half of its 8,600 employees own shares in the company. Veidekke is listed on the Oslo Stock Exchange and has always posted a profit since it was founded in 1936.